Question

explain the types of liquidation​

Answer 1

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A Voluntary Liquidation takes one of two forms depending on the solvency of the company (if it can pay its debts when they fall due). ... Insolvent companies require a Creditors Voluntary Liquidation (CVL). Members Voluntary Liquidation. A Members Voluntary Liquidation (MVL) is a formal way to wind up a solvent company.

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Answer 2

A liquidation process is not solely due to a business becoming insolvent. A common reason for liquidation is for the directors/shareholders to close a company which has accumulated large reserves and to realise the value in a tax efficient way.

There are 3 types of liquidation:

Members Voluntary Liquidation – where directors/shareholders close a company with large accumulated reserves. In a Members Voluntary Liquidation the company is solvent, creditors are paid in full and the remaining funds transferred to the directors/shareholders. For a more detailed explanation of a Members Voluntary Liquidation click here

Creditors Voluntary Liquidation – where a company can no longer meet it’s debts as they fall due i.e. insolvent. For a more detailed explanation of a Creditors Voluntary Liquidation click here

Court Liquidation – where a company, through either it’s directors or creditors, makes an application through the courts to have a Liquidator appointed